India, although one of the most desirable markets to invest in the developing world, represents only a fraction of the global markets. Only 0.1% of India's wealth is invested overseas (and almost all of it is restricted to a handful of HNIs), which is a discouraging contrast with our developed brethren, where 10-20% of their wealth is diversified internationally. On top of that, a lot of sectors are either absent or underrepresented in our domestic markets - like renewable energy, which is growing by leaps and bounds globally, will only grow stronger if environmental policies are anything to go by, and is ripe for investment. The assortment of investment options abroad is, quite simply, far greater and superior to domestic offerings.

Indian investors are reticent with respect to investing abroad for a swathe of reasons - domestic bias & perceived expertise, fear of risk & instability, poor global awareness and lack of procedural knowledge to name a few, all of which are deeply rooted, and further exacerbated by brokers who only have a superficial understanding of international affairs.

Fortunately, the sentiment is slowly changing for the better. Investors are now allowed up to $250,000 every year in overseas investment under RBI’s Liberalised Remittance Scheme. Multi-currency accounts, that allow investors to receive, pay, and hold multiple currencies, have opened up new avenues for Indians to invest in places like Europe & USA. Asset Management Companies like HDFC Mutual Fund are also launching international funds. In addition to a growing number of Indian brokerages, digital platforms now offer access to foreign stocks too. Accessing international markets is no longer an expensive proposition, nor particularly restrictive. An example of the democratisation of global markets can be seen in the form of Fractional Shares, which facilitate investors with even small portfolios to invest in blue-chip stocks like Meta and Microsoft.

Nevertheless, international investment is relatively new to most investors in India. With the aim of providing clarity and some fundamental advantages of making the move, here’s a list of reasons you should consider investing your money abroad.

• Diversification:

It’s the most crucial benefit of investing abroad. Portfolio diversification is the benchmark of sound investment planning. When we invest, we try to spread our wealth across various assets – equities, bonds, real estate, gold etc. to contain volatility and avert large losses. Similarly, it also makes sense to diversify your investment geographically to offset domestic economic and political risks, business cycles and restrictive tax regimes. It’s also a great way to mitigate asset fluctuation, primarily in dealing with inflation and bullish markets domestically.

• Access to Sectors:

These are opportunities that are either closed off, missing, or restricted in the domestic paradigm. This is visible with consumer tech, semiconductors & rare minerals - all sectors with growing importance, pillars of both developing and developed economies, but sorely limited in the Indian market when it comes to investment opportunities.

• Better Returns:

As is the case with investments made in the thriving tech economies of Singapore & USA. But this is not applicable only to developed nations, neither is it restricted to certain popular sectors. Croatia has been growing steadily over the last decade, inviting more and more foreign investment, which has begotten more investor confidence and made it a great market to park your money in. Denmark on the other hand, has become a desirable destination because of investor-friendly legislation and the overall ease of conducting business. But looking at the countries through a macroeconomic prism, one thing common with all of them that attract foreign investors is their tilt towards free-market economy policies.

• Exchange Rate Benefits:

In investing abroad, the very first advantage that the investor gains is a reduction in risk from exposure to a single currency. The second is the exposure to currency appreciation or depreciation, which has historically worked in investors’ favour, in the case of Indians investing in North America & EU. Take the example of the USD - the Rupee has depreciated at a rate of about 3% for the last 20 years, so those who invested in a blue-chip tech stock in America have doubly benefited from their decision.

• Settling Abroad:

Investments pave an easy, reliable and probably the most welcoming path to emigration. Many countries are now offering residency/citizenship in return for a sizeable investment in business, property or funds. Take the Portugal Golden Visa. Under this program, you can get residency in Portugal (which can eventually lead to citizenship and thereby the right to settle anywhere in the European Union) on investing €500,000 in property, business or venture funds; and similarly in the UK, with its Start-Up & Innovator Visa programmes.

• Exposure to the Best Performing Sectors:

Every country has a core industry it is reliant on, and historical analysis (spanning decades) by firms like Morgan Stanley, Bloomberg & Charles Schwab has shown that these stock markets are often pegged to the trends of these sectors globally, more so than the political and economic climate. For example, the German stock market has moved in tandem with world auto stocks, the Canadian stock market with the energy sector & US with the IT sector. In terms of gains, the US has performed the best over the last 20 years, given the IT boom and the concentration of the firms driving it (apart from MAANG). Diversifying your investments globally keeps you from being tied up to the performance of the core industries of your home country.

Still, investors expect some hand-holding for this type of portfolio allocation in uncharted territory. We here at SUO World do precisely that, helping Indians diversify their portfolio geographically and getting you the best bang for your buck.